Go with the Flow

You’ve probably heard the phrase ‘cash is king,’ but do you really know what it means, beyond the concept of making more of it than you spend? Many new business owners, and even some seasoned entrepreneurs, don’t.

Lenders and investors? They understand cash. They don’t care about your plan to change the world unless it includes some down-to-earth cash flow projections.

The problem is confusing profits with cash flow, which are completely different things. Profit is income less expenses, but not all income represents cash in.

For example, if you made a R4 000 sale, but the customer hasn’t yet paid you, that’s still income. Likewise, if you bought supplies that you won’t pay for until the vendor bills you, that’s an expense, even though it has yet to impact the cash you have in the bank. So an income statement doesn’t tell you anything about your cash flow. Even a profitable business can run out of cash and have to close up shop

SME owners pay rent, usually in advance. They often let their best customers pay on account, so they’re not collecting the cash until 30, 60 or 90 days after the sale. And there’s the unexpected, like product loss and theft. This reduces cash flow, but not costs.

Cash flow hazard alert

Cash flow projections can’t predict the unpredictable, but they can alert you to the more foreseeable hazards. While you might want to leave the actual number crunching to a professional, you still need to understand the principles.

1. Cash should flow in faster than out Cash flows into a business from:

Cash sales

The collection of accounts receivable (sales you made, but weren’t paid for right away)

Cash you put into the business

Cash flows out for:

The purchase of goods and services

Accounts payable (payments due for goods and services purchased)

Wages, benefits and payroll taxes

Equipment purchases

Deposits (such as pre-paid rent)

Loan payments (principal and interest)

2. Cash flow projections should be done at least monthly for the next year, and quarterly thereafter

If you’re growing fast or you’re teetering between solvency and insolvency, weekly or even daily projections are a must.

3. Cash projections are only as good as the underlying assumptions

While you don’t have a crystal ball to predict revenue, you should be able to nail down the cash-out side of the equation. Take care to accurately project when irregular expenses, such as insurance premiums and membership fees, will actually come due.

Estimate your income based on real market research. Talk to others who have started similar businesses about their experience, especially when they were starting out. Don’t base your income on some arbitrary percent of the market. Consider that even with all its years in business, its clever ads and its charismatic leader, Apple accounts for only about 5% of the global computer market.

Once you have a reasonable ‘guesstimate’ of income, see what your cash flow looks like if sales are 10%, 15% or 20% higher or lower than projected. Do the same for any fuzzy expense estimates. And don’t forget to project what happens to your cash flow if customers don’t pay on time.

Pace of growth

Don’t assume it’s going to follow a straight line, nor that the line is going to consistently move in the same direction.

Kate Lister is a former banker, small business investor and veteran entrepreneur. Her books and websites include Finding Money: The Small Business Guide to Financing and Undress For Success: The Naked Truth About Making Money at Home.

18 Ways I’ve Earned Rent Money When I Was Broke

It’s an interesting world out there. In the past five years I’ve gone from being worth millions to being broke to being worth a millions again. There’s been more than one month where I didn’t have enough money to pay rent. There are times you need money, and need it quick.

With a more connected world, there are more opportunities to make money doing micro jobs and taking advantage of constantly evolving opportunities. Plus, globalisation has opened the door to add value for people well outside of your immediate proximity.

Here are 18 quick ways I’ve made money to pay rent when money is tight:

1. Teach a skill that you’ve mastered to others

If you are a talented musician, athlete or you have other desired skills, you could get paid to teach others. You could either become a freelanceteacher or look for a service that helps match you with clients. This is an opportunity to make some serious money, improve your teaching ability and help others. Do not underestimate all of the time you spent as a kid playing the piano or learning to do backflips.

I’ve been able to scrounge up $100 teaching math to neighbourhood kids. This could turn into a longer gig as well.

2. Drive for Uber and/or Lyft

There are a few prerequisites you have to meet to become a driver. Assuming you are 21+, have been driving for three years, have a clean record and a nice enough car, though, you can make serious money driving for Uber or Lyft. You can be a driver for both at the same time, and can drive at whatever hours you want.

It took me about a week to be all setup to drive. So it’s not an overnight money situation, but it’s a quick way to make some money for bills. Most of the time money is deposited very quickly, often the same day.

3. Put a room in your house on Airbnb

There are inconveniences that come with being an Airbnb host, but it is quite easy to do so. As long as you have a room to spare in your house, you can rent it out for extra money. Plus, it could give you an opportunity to meet and connect with interesting people.

It took about three weeks for me to get set-up, actually host guests and see money in my bank account. It can happen faster but that’s about the timeframe it took me.

4. Build a social media brand

Social media is quickly becoming the world’s most powerful platform for generating revenue and reaching an audience. While the ecosystem is becoming more and more competitive, there are a number of tools you can leverage to stand out.

I’ve personally used this Instagram automation serviceto help me accelerate my growth quickly and gain new followers. It is important to invest in generating high quality content such that you develop loyalty among your fans before you begin to monetise.

I now can earn a few hundred bucks quickly by pushing brands out online.

5. Go through your old things and sell them

You likely have books, clothes and other novelty items lying around that you no longer use. Spending a few days to go through those things and list them on Amazon, eBay or other sites to make some extra cash.

6. Pickup jobs on Fiverr

There are countless tasks on Fiverr that you can pick up. None by itself is a large amount of money but doing many tasks, though, can add up to a nice chunk of cash.

Money comes a few days after the task is completed. Most are cheaper tasks with demanding customers but can really start to add up. One month I paid all my bills from just working on Fiverr at $5 per gig that I did.

7. Dog walker/sitter

You can do this on a neighbourhood level or use a service to find clients. Walking or sitting for dogs tends is minimal effort for extra cash. Plus, if you like animals, what is better than getting paid to spend time with them?

I recommend starting small, say $1-2 per hour and working your way up once you have stable clients. It’s not much, but it can start to add up over time plus give you enough money to make bills.

8. Take advantage of credit card deals

There are countless credit card deals that are always popping up. Managing multiple cards is not the most fun, but it can yield you significant benefits. Be on the lookout for these deals. Some require that you spend a certain amount on the card within the first few months, and others have yearly fees. If the money that you are getting is greater than your costs, though, they can be a great use of time. Plus, if you are spending a certain amount of money anyway, you might as well do so on a card that will give you the maximum benefits in return.

9. Go thrift shopping and resell the best items

People turn in some awesome items to thrift stores. Going through the stores to find good deals is both fun and rewarding. You will likely find some items you can resell for a nice profit, and you might even find some cheap things to keep.

10. Proofread

You can get paid to proofread articles, books, and journals today. You have to be meticulous and able to stare at a screen for a while, but it is nice and relaxing money in return. Sites like Freelancercan help you find clients to do the proofreading for.

11. Do surveys and studies

Services like Mechanical Turk will pay you to take surveys, and there are always listings to get paid for participating in studies. The work can be a bit monotonous, but it is typically a mindless way to make money.

12. Keep your email receipts

You can make money today simply by not deleting receipts that come via email. Earnyautomatically scans your email for old receipts and matches what you paid to current prices. When there is something being sold for less money, now, they will help you get the difference back.

13. Take advantage of your data

There are services that will give you money just for offering access to your data. For example,Nielsen gives money away just by letting them install a software on your computer that tracks your habits. It might feel scary to give others access to this data, but in many cases, it will have zero impact on you.

14. Make a bet to do something that will improve your life

If you have a goal you are trying to accomplish, make a bet with someone that you can do it.

This could be a great way to lose weight or pick up a new talent. It will incentivise you to actually do so, and you will be able to make some money for your efforts. Keep track of this in your calendar app.

15. Be a mystery shopper

You can get paid to pose as a regular customer for services like pizza delivery. Mystery shoppers are how companies test their customer service, and, in return, you can will get paid. You have to find the right deals, but doing so offers another effortless way to make money.

16. Become a search engine evaluator

17. Sell your trash or recycling

There are countless companies that will pay for your empty cans and sometimes even your trash. You are going to be creating the waste anyways, so why not take advantage of it?

18. Approach companies for consulting services

If you have a skill that you think you can help businesses with, then approach them about it. Many companies, even successful ones, struggle in a variety of different areas. If you know what you are doing and can demonstrate that, you could make some serious money helping a company out. This could especially be the case for companies that do not have enough money to hire more people full time but have enough to pay a one-time fee for a project or service. Hot topics today include SEO, digital marketing, and design.

Ready to take your making money to the next level? Here is a quick self employedguide to help you get started.

4 Scenarios When It Makes Good Sense To Take On Business Debt

You need to invest money into your business to make it grow. You need money to expand your workspace, buy more materials or equipment and to market your business.

Without an infusion of money, your business will remain stagnate. You might be able to grow a little bit, but you’ll never get big results.

If your business doesn’t bring in a large revenue that can be funneled back into the business, you’ll likely need some type of loan. The loan will give you a financial boost, and you can pay off the loan with increased revenue from business growth.

You shouldn’t automatically think of debt as a bad thing. Debt is often necessary to grow. But, there are good times and bad times to take on debt.

Here are four times taking on debt is beneficial to business growth.

1. You want to provide more products

If you want to offer new products or carry more inventory of current products, you need money to buy them. Getting a small business loan can give you enough money to provide more products.

When you carry more inventory, you need space to store and display it. You might use a storage unit, buy a second location, move to a larger location or maybe even add on. Small business debt can help you purchase more space.

2. You want to increase your marketing efforts

You will only get more customers by getting the word out about your business. That’s why you need small business marketing.

Marketing doesn’t have to be expensive. You might create something as simple as flyers or do basic social media marketing. But, to reach more people, you might need more elaborate marketing tactics. You can invest in magazine ads, radio ads, billboards, pay-per-click ads and more. To achieve marketing success, you might need to consider taking out a small business loan. The extra cash will let you market your business well. You can pay off the loan with the increased revenue from the influx of new customers.

3. You want to build your credit score

You need good credit to get a loan. Plus, good credit can get you better payment terms with your vendors. But to get good credit, you need experience with taking on and paying off debt.

Taking out small loans can improve your business credit score. Small loans show that you are responsible and capable of handling debt. And when you make payments on time, your credit score increases.

Once you build up your credit and prove to lenders that you can handle debt, they will be more willing to give you larger loans. And, your score and timeliness might result in better loan terms, such as lower interest rates.

4. You want to hire employees

At some point, you might spend so much time on your business that it consumes your life. You might miss out on time with your family and friends. Or, you might have so much business stuff to do that you can’t get everything done.

Hiring an employee can help you grow your business. You can get more done and produce better quality work. You can hire employees who have special skills that will benefit your business.

Spending money on an employee is worth it if having that employee can help you earn more money. If this is the case, you might take out a loan to help prepare for the employee, cover recruiting fees, and pay for wages until your business begins earning more. When figuring out how big of a loan to take out, make sure you consider the true cost of hiring an employee.

The traditional model of stokvels are evolving. A major draw card that comes with starting or joining a stokvel club is the group buying power that comes from the cooperative model. Yes, this can be used to secure significant discounts from wholesalers in many instances when making bulk purchases and sharing these savings across members. However, as stokvels have evolved over time, we are seeing more and more stokvels looking to use their group buying power to make “smart purchases” that can turn a profit in the long run.

Arguably becoming business club orientated instead of consumer club orientated. This article explores smart tactics stokvels can employ to get the most bang for their buck in 2018 instead of purely being consumption based.

How do you generate income with your group buying power?

Getting a great deal on perishable goods is never a bad thing. However, your stokvel can do a lot more with its buying power to earn revenue for its members. Our foreign brothers and sisters from the rest of Africa who are running spaza shops have unlocked one of the secrets to this. Using their collective buying power to amass perishable items at notably discounted rates to sell at a highly competitive rate, they are able to earn revenue from the cooperative model approach. This principle can apply in any business where bulk buying opportunities exist for “cooperatives”.

For example, minibus taxi owners/associations looking to get better deals can galvanise and approach car manufacturers and those who sell parts for better bulk discounted prices on vehicles or parts. The trick here is to look at purchasing “perishable goods” that as their value or usage gets discounted, you are able to generate revenue out of them higher than the purchasing amount.

How to identify perishable goods that can generate revenue for you or your stokvel?

Based on the taxi and spaza shop examples above, arguably it is easier to identify such goods when you are in a common business with your stokvel members. However, this is an economics exercise i.e. identifying goods which are high in demand that you’re stokvel can supply at a profitable rate. As a stokvel, you should be asking yourselves what are essential perishable goods that are in high demand, that your family, close friends and immediate neighbours need. For example, toilet paper is a perishable good that is and always will be in demand. Would it not make sense to source this perishable item at a bulk for sale to friends and family of the stokvel?

Better yet, if one of the stokvel club members has enough storage space, would it not make sense to purchase the toilet paper making machine as an asset? Your stokvel must get entrepreneurial about the immediate opportunities that exist around them and see how best to take advantage of these gaps. However, if your stokvel does not have a slight of entrepreneurial bone in it not to worry. There are innovative ways for your stokvel to purchase such assets that yield great returns for your stokvel club. One such way to do this is through asset crowdfunding platform, The People’s Fund.

The truth is that your bulk buying power strength depends on how well your cooperative model approach is organised and well run. The stronger your cooperative model approach, the stronger you will likely leverage off other forms of revenue generators better than perishable goods such as asset rental discounting products.

At the end it comes down to not only how much you have managed to save but also how well you can generate additional revenue from your savings. After all, isn’t money suppose to work for you?